CPUC Implements Six Steps for the Monitoring of PG&E

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By Justin Dalton

On August 5, 2021, the California Public Utilities Commission (CPUC) adopted Resolution M-4855 to set the selection process, scope of work, and schedule for an Independent Safety Monitor that will complement the CPUC’s oversight of PG&E. PG&E entered bankruptcy in 2019 following lawsuits resulting from multiple wildfires that were started from its power lines. [24:2 CRLR 223–224; 25:1 CRLR 268–270; 25:2 CRLR 164–166; 26:1 CRLR 198; 26:2 CRLR 229] The Independent Safety Monitor is a requirement for PG&E as a part of its reorganization plan under D.20-05-053 to exit bankruptcy with specific financial and operational conditions. The Independent Safety Monitor was established to ensure that PG&E prioritizes and implements the highest level of risk reduction across all levels of the company. According to the press release, request for proposals will be sent out seeking an Independent Safety Monitor, and the CPUC will select the Safety Monitor from eligible candidates.

D.20-05-053, approved in 2020, instituted an Enhanced Oversight and Enforcement (EOE) process. This EOE process was established to supplement the CPUC’s existing enforcement authority. This process has six possible steps (I.19-09-016, Assigned Commissioner’s Ruling and Proposals, Appendix A at 14), ranging from the adoption of additional reporting requirements in step one, to a formal review of PG&E’s Certificate of Public Convenience and Necessity (CPCN) in step six. The six steps are further grouped into two sections: Enhanced Reporting and Enhanced Enforcement.

Step one, “Enhanced Reporting,” can be triggered by PG&E’s failure to comply with the CPUC’s conditions and requirements. If step one is triggered, PG&E must submit a Corrective Action Plan (CAP) to the Executive Director of the CPUC within twenty days of being placed in step one. Step two is Commission Oversight of Management and Operations, which involves PG&E’s submission of an updated CAP, which PG&E must comply with. Steps three through six, “Enhanced Enforcement,” starts with the Appointment of an Independent Third Party Monitor (Step 3). Step four involves the Appointment of a Chief Restructuring Officer (CRO), who will have full management responsibility for developing and directing PG&E to implement the CAP. Step five is the Appointment of a Receiver, who would have the power to control and operate PG&E’s business units in the public interest, but could not dispose of the operations, assets, business, or PG&E stock. Step six entails review of PG&E’s CPCN. If PG&E fails step six, pursuant to SB 350 (Hill) (Chapter 27, Statutes of 2020), it could be converted to the nonprofit public benefit corporation for the purpose of owning, controlling, operating, or managing electrical and gas services for its ratepayers and for the benefit of all Californians, entity called Golden State Energy.

As of April 15, 2021, PG&E was at step one. In June 2021, the California Public Advocates Office urged the CPUC to find that PG&E was no longer in good standing for the rest of 2021, as there were many deficiencies in PG&E’s wildfire mitigation plan. At this writing, the evaluation of PG&E’s status in the EOE process has not yet taken place.

On August 24, 2021, related to Resolution M-4855, the CPUC sent a letter to PG&E reminding PG&E of the urgency to remove felled trees during its 2020 post-wildfire restoration work, and to request that the PG&E take action to address trees felled for any post-wildfire restoration efforts for 2021. The letter contained specific requests, such as that PG&E immediately establish a felled tree removal plan for the customers impacted by wildfires in 2020, and to consider every possible commercial use for the felled trees once they are removed.

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